Lord McNally: My Lords, I am pleased to follow the noble Lord, Lord Cope, speaking as he does with experience of both the Northern Ireland Office and the Home Office. In particular, I associate myself with his concluding remarks. When we debate the Terrorism Bill, which deals with broader issues, we must take into account the global nature of terrorism and the need to keep our domestic law as free as possible while recognising that there are those willing to use that freedom and liberal approach abusively in order to further their interests in foreign counties. That will be a big issue in our debates on that Bill.

As the Minister indicated, this is probably the last time we shall discuss this order in this form. My right honourable friend Alan Beith, in another place and at another time, described this legislation as a regrettable necessity. That remains our view.

A year ago we were much more optimistic. Sadly, our hope that the Good Friday agreement would quickly lead to normality proved over-optimistic. That does not mean that we should give up the efforts to further the process. As President Clinton reminded the main protagonists in Washington last week, it remains the best hope for this generation of achieving a lasting peace in Northern Ireland.

But even if Northern Ireland takes its opportunity, it is clear that terrorism in the 21st century will know no frontiers. The Liberal Democrats see the need for the legislation and for the security services to protect our way of life from terrorist violence. But extremism cannot be fought and overcome unless democratic societies retain the support of their people. To do that, the security services and security legislation have to be kept under review and made subject to parliamentary accountability. So our first base is that democratic societies have a right and duty to protect themselves against the terrorists.

However, the powers which the state takes should be no more than sufficient to the task. I liked the Minister's phrase that they should be proportionate to the threat. If, in the fight against terrorism, we constrict our liberties and civil rights, we give a victory to the terrorists. Therefore, we on these Benches make no apology for saying that we will scrutinise anti-terrorist legislation with an eye to the implications for civil liberties and human rights.

Members on both Front Benches mentioned the report of J.J. Rowe QC. I have had the pleasure of meeting him; he is a most impressive public servant.

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That is reflected in the thoroughness of his report. Like the Minister, I was impressed by his assessment that he found care and fairness on the part of those exercising the Prevention of Terrorism (Temporary Provisions) Act. He also stated that there was active training on the implications of the Human Rights Act and an awareness of the need to have in mind the convention when operating these powers. That is greatly reassuring for Parliament.

The Minister mentioned the decades of terrorism that we have had to endure. It is 25 years since my noble friend Lord Jenkins produced the first Prevention of Terrorism (Temporary Provisions) Act. Yet it is amazing how much terrorism has failed. No atrocity or outrage has moved opinion in Parliament or in the country to make us weaken our resolve as regards our commitments and duties in Northern Ireland. The issue in Northern Ireland is not British imperialism, but the ability and the capacity of the people of Northern Ireland to find a way to live one with another in peace. I am afraid that on that the jury is still out.

We note with approval that the Government have excluded internment without trial and exclusion orders from the measures before the House tonight. These are, I believe, genuine confidence-building measures against the background of the peace process. It would be even more reassuring to hope that the terrorist organisations had stood down on training and recruitment. Alas, that is not the finding of Mr Rowe in his report. He believes that training and recruitment continue. If that is the case, what we have is not a ceasefire and a peace process, but an armed truce.

The reality of terrorism was brought home to me by an article in this morning's Independent on the death of Tim Parry in Warrington seven years ago today. It stated:

"He has told the story a thousand times but there is still a rawness in Colin Parry's minute recollections of his 12 year-old son's last morning. 'I remember giving him a big squeeze', said Mr Parry. 'His head came up to here, beneath my chin. It fitted into you nicely". Father and son went their separate ways and by nightfall that Saturday 'a surgeon in his greens' was standing before Mr Parry, tipping a St Christopher chain and a watch out of an envelope. They were Tim's. It was the first confirmation that his son had been injured, let alone killed, by that 1993 IRA bomb attack on Warrington".

In its starkness, it brings home the vile futility and wickedness of terrorism. The report goes on to explain that Warrington's response is today's opening of the Tim Parry/Jonathan Ball Young People's Centre. Jonathan Ball was a 3 year-old, also killed at Warrington.

Our response should be threefold: first, to continue to work for the peaceful resolution of conflict in Northern Ireland and elsewhere; secondly, to continue to resist terrorism and extremism; and, thirdly, to continue to protect civil and human rights. Only by resisting terrorism and protecting basic freedoms do we honour and keep faith with Tim Parry, Jonathan

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Ball and all the others who have been killed and maimed by terrorists over the years. These Benches support the renewal of this order.

8 p.m.

Lord Bassam of Brighton: My Lords, I am extremely grateful for the support shown from the Opposition Benches by the noble Lords, Lord Cope and Lord McNally, for the renewal of the order. I, too, feel very moved by the description which the noble Lord, Lord McNally, repeated to us from the Independent newspaper. It reminds us in a timely way of why we need this legislation on the statute book and why we need the legislation that we shall bring forward later in this parliamentary Session. The discussions around that legislation will obviously be important because they will frame the way in which we tackle the threat of terrorism over the next years and decades.

I have no doubt that we shall continue to require that legislation. It is important and it provides our society and communities with the kind of protection that legislation has given over the past 25 years. I do not wish to go into great detail about what we shall bring forward. However, I believe that its importance lies in continuing the accountability to which the noble Lord, Lord McNally, referred. It continues to demonstrate the Government's vigilance and the continued vigilance that extends, I believe, across the parties.

I hope that over time the terrorist threat in Northern Ireland will diminish further. Although the peace process may not be making the rapid progress that your Lordships' House would wish to see, there have been encouraging signs that the civilian population, quite understandably, retains its enthusiasm for peace, and that the activity of terrorists has continued to diminish. However, we need to be ever watchful. This legislation will enable us to do that within a framework of the law and of democratic accountability. That is the tradition to which we must adhere. For those reasons, I am grateful that this evening noble Lords have given their support to the legislation. I commend the Motion.

On Question, Motion agreed to.

Lord Bach: My Lords, I beg to move that the House do now adjourn during pleasure until 8.35 p.m.

Moved accordingly, and, on Question, Motion agreed to.

[The Sitting was suspended from 8.3 to 8.35 p.m.]

Financial Services and Markets Bill

House again in Committee.

Clause 10 [Reviews]:

Lord Saatchi moved Amendment No. 79:

Page 4, line 41, leave out ("may") and insert ("must on the second anniversary of the day on which section 1 comes into force and every two years thereafter").

The noble Lord said: Amendments Nos. 79 and 81 to 83 relate to the intervals at which reviews of the FSA should take place. I should like to discuss also the next

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group of amendments--Amendments Nos. 80 and 84 to 86--which deal with who will carry out the reviews. If it is for the convenience of the Committee, I shall try to cover the key issues in relation to those amendments.

One would have thought that having a review of the FSA would be a reasonable suggestion. But extraordinarily, there is no provision for it in the Bill. The Bill states:

"The Treasury may appoint an independent person to conduct a review".

However, on the other hand, it may decide not to conduct a review. It is up the Treasury. Therefore the clause is what is called an enabling clause.

Any doubt about that is removed by the Explanatory Memorandum which states that,

"the Treasury can commission independent reviews".

The fact is that the Treasury can do just about what it likes under the clause. Not only can it decide whether to have a review in subsection (1), but in subsection (2) it can decide to limit the scope of the review, and subsection (3) specifically excludes the opportunity for a fundamental review. Nor is the independence of the reviewer guaranteed. The Treasury can also decide what "independence" means. Subsection (7) states:

"'Independent' means appearing to the Treasury to be independent of the Authority".

We believe that the Bill hands too much power to the Treasury. The enabling provisions amount to an unacceptable level of discretion in the hands of the Treasury and we should like to find ways to limit it. I hope that the Minister will concede that reviews should take place, not merely when the Treasury decides but even when the Treasury and Treasury Ministers might not find it convenient to have a review. I hope that he will concede also that leaving the scope of the review entirely in the hands of the Treasury cannot be satisfactory. I do not believe that the industry considers that to be satisfactory.

I expect that in a few moments the Minister will say that the FSA is accountable to the Treasury and the Treasury is accountable to Parliament. He will probably point out also that there are the consumer and practitioner panels to assist with the review process. It is true that the Government have conceded some form of review. The clause as it stands was a concession after consultation. But their concession starts to disappear the more that one looks at it. Is it not true that, as we heard earlier, the consumer and practitioner panels have serious shortcomings, as many noble Lords have said? It is not clear how much notice the FSA and the Treasury will need to take of the panels' recommendations. The chain of accountability from the FSA and the Treasury to Parliament is weak and it does away with questions on the Floor of the House. We believe that we need something stronger for such a powerful body.

Where can we go to get something better? That is where Amendments Nos. 80 and 84 to 86 arise. They deal with the question of who should conduct reviews and they suggest that the Comptroller and Auditor General of the National Audit Office should take that

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role. One cannot compare the Treasury and the independence of Treasury Ministers with the NAO's role. Treasury Ministers have a government to run and a party political agenda to pursue. The NAO is and has on many occasions been seen to be unimpeachably independent. It has the power to produce reports which go to the Public Accounts Select Committee. It can provide a more thorough and detailed form of parliamentary scrutiny than the proposed system. The NAO already conducts reviews of other public bodies, some of which include the other principal regulators, such as those for the electricity, gas, rail, telecom and water industries.

The Government have argued before that the FSA does not receive public funds, so it should not be scrutinised as a public body and should not be subjected to such a review. But who can argue with the fact that Parliament is entitled to ask for an independent full review of a body in which it places so much power and public trust? That is what the two groups of amendments seek to achieve. I beg to move.